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Fuel Price Deregulation, Smoke Screen Or Real Solution?

BI
Barnard Inc.

Contributor

Barnard Inc is a full-service commercial law firm, with services covering corporate and compliance, intellectual property, construction, mining and engineering, property, fiduciary services commercial litigation, M&A, restructuring, insurance, and family law. Our attorneys advise listed and private companies, individuals, and local and foreign organisations across South Africa, Africa and internationally.
In January 2021 consumers paid about R14,99 (+/-USD 1,02) for one liter of 95 Octane petrol. By April 2022, South Africans are paying around R21,96 (+/-USD 1,50) for the same liter of petrol...
South Africa Energy and Natural Resources

In January 2021 consumers paid about R14,99 (+/-USD 1,02) for one liter of 95 Octane petrol. By April 2022, South Africans are paying around R21,96 (+/-USD 1,50) for the same liter of petrol - this amounts to a 46,5% increase in the price of fuel over a 15-month period.

The Government is considering the deregulation of fuel prices which will allow stations to enter into the arena and compete on fuel prices, set any price for fuel and offer discounts and promotions on fuel.

According to Reggie Sibiya, CEO of the Fuel Retailers Association (FRA), this decision will be a set back and will ultimately kill transformation of the sector in South Africa and will specifically hit Black Owned Fuel Stations the hardest.

The Sunday Times reported that according to our finance minister, Enoch Godongwana, the deregulation of fuel prices will only be implemented once the Government finds a solution to recover the estimated R90 billion worth of fuel taxes which would be lost should the deregulation action be implemented. One of the measures on the table for consideration is the adding of additional taxes on motor license renewals in order to make up for the Road Accident Fund levy.

Will this intervention by the Government bring real financial relief or will it simply shift the cost-headache to another line item on consumers' ever-bulging budgets? Likewise, will the Government's attempt be a long-term solution or will this be the final nail in the consumer's coffin?

South Africans need a permanent solution. At least the attempt by the Government shows that they are taking the continued increases in fuel prices seriously and that they are working on a solution. Will it will be to the benefit of all consumers? That is the R90-billion question.

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